Projects and Energy Weekly Snippets
22 May 2015
Eaton and DES team up on African power
Eaton Africa, the regional arm of the $22 billion revenue NYSE-listed Eaton Corporation, signed a first premium distribution partnership on 14 May with SA’s ZAR1 billion-a-year Diesel Electric Services (DES) to take advantage of Africa’s need for power. While South African customers are looking for secure and renewable energy supply to offset Eskom’s increasingly costly and unreliable power, the growth of other African economies in the past decade has also created demand for power that utilities are struggling to meet.
MD of DES Kevin Donaldson said the rationale for signing a partnership was that the companies had a similar approach to business and client base. DES designs, manufactures, installs and maintains generator sets, distribution boards and related products. Mr Donaldson said clients in Africa wanted a single-solutions provider. DES would provide the service, sourcing 80-90% of its products from Eaton Africa’s range, adding to the existing DES range, and the partnership would also benefit from Eaton’s marketing power. Eaton Africa MD Shane Kilfoil said the deal would help the company expand its presence, targeting utilities, commercial buildings and data centres.
Business Day, 15 May 2015
Energy firm expects to explore Karoo in parallel with shale-gas risk assessment
ASX-listed Challenger Energy, whose subsidiary Bundu Gas and Oil Exploration is aiming to explore for shale gas in South Africa’s Karoo, says it expects to be in a position to pursue its exploration programme in parallel with government's two-year strategic environmental assessment (SEA) of shale gas development in the country.
Government formally launched the ZAR12.5 million SEA earlier this week in an effort to develop the “evidence base it needs to make informed decisions regarding the exploitation of shale gas”. Challenger Energy stated that it is supportive of South Africa’s efforts to ensure safe and sustainable exploration and development and that it does not view the SEA as a major risk to its exploration plans.
In February, Bundu submitted an updated Environmental Management Programme to the Petroleum Agency South Africa and Challenger says it expects the Department of Mineral Resources to publish a Gazette notice in the coming weeks outlining the regulations governing the exploration phase. Bundu's exploration right application is based on an initial work programme that does not include hydraulic fracturing, or fracking, so “we expect to be able to proceed in parallel” with the SEA. Bundu expects to begin its exploration activities in the second half of 2015.
Engineering News, 15 May 2015
World needs to speed up renewable energy programmes
The world is heading in the right direction to achieve universal access to sustainable energy by 2030 but must move faster, a new World Bank report that tracks the progress of the Sustainable Energy for All (SE4All) initiative, said on 18 May. The share of modern renewable energy, from sources including hydro, solar and wind energy, grew rapidly at 4% a year during the tracking period. Still, to meet the 2030 SE4All objective, the yearly growth rate for renewable energy had to be closer to 7.5%.
“We are heading in the right direction to end energy poverty, but we are still far from the finish line. We will need to work a lot harder especially to mobilise much larger investments in renewable energy and energy efficiency. Leveraging public finance to mobilise private capital is imperative in achieving these goals,” World Bank energy and extractives global practice senior director Anita Marangoly George said in a statement.
To help close the gap, the report recommended that global policymakers and stakeholders triple energy investment. Global investment in energy would need to increase from roughly $400 billion a year at present to between $1 trillion and $1.25 trillion a year. It also suggested that modern methods of measuring energy access should be adopted. Further, the report found that there was a need for the transfer of knowledge and technology for sustainable energy, while countries with lower capacity would need access to state-of-the-art clean energy technology and associated knowledge. Stakeholders would also need to tackle the linkages between energy and other development sectors, as energy was closely linked to water, agriculture, gender and health.
Engineering News, 18 May 2015
Nuclear procurement to start despite questions
Government will begin with the procurement of nuclear power by July and hopes to have a successful bidder by the end of the year, Energy Minister Tina Joemat-Pettersson said in parliament on 19 May. Ms Joemat-Pettersson, who was presenting the budget vote for her department, repeated an undertaking that the process would be “competitive, fair, transparent and cost effective”, but gave no details on what model of ownership was under consideration and if the project would be financed by the government.
Government has signed a series of agreements on nuclear co-operation with vendor countries. Ms Joemat-Pettersson, who has kept the agreements under wraps, said they would be presented to cabinet next week, after which they would enter the parliamentary process for approval. Ms Joemat-Pettersson also gave an update on plans to expand the production of energy by other fuels. Most significant among these was the release of a request for information for gas-fired generation.
Responding to the budget vote DA MP Ian Ollis - in a speech read on behalf of fellow MP Gordon McKay - said Ms Joemat-Pettersson’s enthusiasm for nuclear power “was confusing and irresponsible” as several international agencies had found recently SA’s nuclear capabilities lacking. Mr Ollis also criticised Ms Joemat-Pettersson’s failure to submit an updated Integrated Resource Plan to cabinet to assist in energy planning.
Business Day, 20 May 2015
SA’s bidding model facilitates big fall in renewables tariffs – Minister
Energy Minister Tina Joemat-Pettersson reports that South Africa’s competitive-bidding model for the procurement of renewable-energy projects from independent power producers (IPPs) has delivered major cost reductions since its introduction in 2011. Speaking to lawmakers on 19 May, the Minister said that, in April 2014 terms, the average per kilowatt hour tariff for onshore wind had declined by 55% to an average of 62c, while the solar photovoltaic (PV) tariff had declined by 76% to 79c.
Following four bidding rounds under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), 5 243 MW had been procured, with 37 projects, or 1 827 MW, already connected the national grid. The programme had also secured capital investment commitments of about ZAR170 billion. By 2022, 17 000 MW of IPP capacity would be added to the South African electricity mix from renewable-energy, cogeneration, coal and gas sources, with the Department of Energy (DoE) set to procure the capacity at a rate of 2 400 MW a year.
The department had submitted new determinations to the National Energy Regulator of South Africa (Nersa) to enable the procurement of an additional 6 300 MW under the REIPPPP, while a request for proposals (RFP) for an additional 1 800 MW from existing bid submissions was on course for release by June 2015. The DoE was also seeking Nersa’s concurrence for a determination relating to the procurement of 1 800 MW from co-generators, to be procured under a revised model.
Engineering News, 20 May 2015
The above reflects a summary of certain news articles published during the preceding week. It is not an expression of opinion in respect of each matter, nor may it be considered as a disclosure of advice by any employee of Hogan Lovells.